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FATTY FOOD
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Cadbury Schweppes, the UK soft drinks and
snacks giant, is the European food manufacturer most at
risk of being sued by consumers claiming that its
products contribute to obesity, according to a research
report by JP Morgan. The maker of Jelly Babies, Dairy
Milk chocolate, Dr Pepper and Slush Puppie, ranks second
only to America's Hershey corporation in a league table
compiled by the US investment bank of food producers
exposed to obesity-related lawsuits.
Growing concerns that the food industry will go the same
way as tobacco and face a barrage of crippling damages
claims forced Kraft, the world's second-biggest food
manufacturer, to announce earlier this week that it is
cutting the amount of fat and sugar in its products and
reducing the size of portions.
The JP Morgan research says that the rise in obesity to
"epidemic" proportions, with more than 1
billion of the world's population overweight, poses a
serious threat to the food industry. It increases the
risk that advertising, labelling, and distribution will
be more tightly regulated and it will force manufacturers
to overhaul their marketing practices and spend more on
consumer education and research. "This is not good
news for volume growth or margins," says the study.
Two lawsuits have been filed against McDonald's since
summer last year claiming its products contributed to
obesity and although the first case was dismissed, the
second is still ongoing. JP Morgan's London-based analyst
Arnaud Langlois said, "We believe one thing is
certain, well capitalised law firms with a wealth of
experience in tort action lawsuits in tobacco and
asbestos will continue to target the deep pockets of the
food companies."
The research lists Hershey, the US manufacturer of the
eponymous chocolate bar, as most exposed to the obesity
risk, followed by Cadbury, Coca-Cola, PepsiCo and Kraft,
which is owned by Philip Morris. Unilever, the
Anglo-Dutch food giant behind brands such as Pot Noodle
and Findus beefburgers, ranks 11th.
JP Morgan says 88% of Cadbury's group sales fall into the
category of "not so healthy" food compared with
95% for Hershey and 23% for Unilever. "Among the
European food players, Cadbury is most exposed to obesity
concerns. This is the result of its large soft drinks,
sugar and chocolate confectionery business," says
the research.
However, it says some food companies could benefit by
being seen as a "hedge" against obesity because
of the perceived healthiness of their products. The
research lists the French yoghurt manufacturer Danone top
of the league, with 80% of its food products classed as
"healthy". Unilever ranks 10th in this list
with 61% of its food range deemed to be in the
"healthy category".
The number of obese people in the world has risen by 50%
in the past seven years and globally there are estimated
to be 300 million obese adults. In the US, 30% of adults
are obese while in Europe, 135 million people are
affected by obesity. A battle is raging between the food
lobby and health experts as to whether the cause is
increased consumption of unhealthy foods or lack of
exercise.
A spokeswoman for Cadbury's said, "We regard obesity
as a very important social issue and we are working with
the Government and the World Health Organisation to
develop ways to tackle it. One of the main causes seems
to be lack of exercise whereas calorific consumption
levels are dropping in the UK." (Source: The Independent)
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